- To continue to implement appropriately loose monetary policy
- Will step up counter cyclical adjustments, help to expand domestic demand conditions
- 7-day reverse repo rate remaisn the main policy rate, which provides pricing anchor for markets
- Overnight reverse repo operations will help improve liquidity management
- Studying plans to gradually increase frequency of overnight reverse repo operations
- To steadily push forward with reforms to improve policy framework
- To keep Chinese yuan currency basically stable
- Yuan currency faces both upward and downward factors, to continue to see two-way fluctuations amid global uncertainties
The headline remark isn’t anything new, which just reaffirms tha the PBOC is continuing to do what it needs to do to try and prop up the economy. That especially as growth conditions are starting to suffer again, as evident with the Q2 GDP report here. The 4.3% growth is the weakest growth pace in over three years.
Besides that, China’s new bank loans also rose by less than expected in June. M2 money supply growth slows to 8% while new yuan loans only amounted to ¥1,610 billion in June, with the latter coming well below estimates of ¥2,000 billion.
And given all the policy moves by Beijing officials, the struggle in the system is quite damning. In essence, it’s a signal that the system is flushed with money but it is just that nobody wants to borrow it. Interbank liquidity is ample but credit demand is just muted or has stalled completely. Trouble, trouble.
This article was written by Justin Low at investinglive.com.